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From The Socialist newspaper, 2 July 2008

60 years of the NHS

Public service or private cash cow?

IT WILL be 60 years since the NHS was set up on 5 July this year. The NHS has been described as one of the best healthcare services in the world and the crowning glory of the welfare state in Britain, with its promise of an equal, high quality, universal service 'from cradle to grave'.
Politicians today are still reluctant to publicly denounce the founding principles of the NHS, but as JACKIE GRUNSELL explains, the multi-billion pound health service of today bears little resemblance to the one created in 1948, and those very principles are under sustained attack.

Prior to the development of the NHS working-class people had to think twice before seeking medical help, as to whether they could afford the bill, which led to enormous inequalities in the health of the population.

As far back as 1842 Edwin Chadwick published his General Report on the Sanitary conditions of the Labouring population of Great Britain. In it he revealed that the average life expectancy in Liverpool at the time was 35 years for the gentry and just 15 for the families of labourers, mechanics and servants, illustrating that social class has always been linked to health inequalities.

What services existed pre-NHS were either private or provided by charities. Later, came the development of local government-run hospitals where the quality varied massively from area to area. Access to GPs was free to low paid workers but not their wives who relied on the GP's good will for treatment.

Older people were more or less excluded from medical care, being consigned to the 'back wards' where doctors rarely set foot, or worse still the Workhouses. Disabled people and those with mental health problems were usually institutionalised in asylums.

After World War Two the war-weary masses began to demand a better life for their efforts fighting for 'king and country'. They had seen the benefits and possibilities of a nationalised, co-ordinated healthcare system with the setting up of an emergency medical service in 1939 and their sights were raised. (Sources: see notes 3,4,6)

After Labour's election in 1945 health minister, Anuerin Bevan, brought forward the idea of a national health service, funded by general taxation whereby the rich would pay more than the poor for an equal service. It would be available to all.

Some argued the service should be means tested and open to the poorest or neediest only. However, Bevan felt that universality would be a guarantee of a high quality service for all, rather than a two tier one based on ability to pay.

People could be referred to any hospital anywhere in the country. All health care would be free at the point of use, this included access to GPs, hospital based treatments, eye tests, dentistry, chiropody and prescriptions. Consultants were to be paid the same wherever they worked, making them more inclined to move out of the city-based teaching hospital and into the district general hospitals, providing a more locally based service. (See notes 1,3,4)

NHS formation

The formation of the NHS was an incredible achievement against enormous opposition, not least from a layer of doctors who felt their interests were threatened. But major government concessions were made, such as allowing GPs to maintain their self-employed status.

Hospital consultants were permitted to continue to practice privately as well as being salaried employees of the NHS. 2 Therefore, from the beginning of the NHS there has remained a two-tier system, those with money being able to opt into private care to speed up their treatment and back out of it, into the NHS again when things go wrong.

Nevertheless, nothing like it existed elsewhere in the capitalist world where insurance-based health care was generally the norm. However within a few years of inception this vital service was already being nibbled away at the edges.

The expected cost of the NHS was being exceeded and prescription charges and fees for dental treatments and eye services were introduced, prompting Bevan's resignation. (See note 3)

Already the government had abandoned one of its founding principles, that the NHS would provide comprehensive services. Ever since, the NHS as it was conceived by its founders, has been chipped away at.

Despite all this, the ridding of health care provision from much of the effects of market forces made the NHS very cost effective and it succeeded in delivering care from cradle to grave, free at the point of use for all. Health care had become a right, not a commodity.

In 1971 Julian Tudor Hart described the 'inverse care law' stating: "The availability of good medical care tends to vary inversely with the need for it in the population served". In other words, even after 23 years of the NHS, those who needed health care least still used the services the most and more effectively than those with the greatest need.

By 1980 this inequality still proved to be the case with the release of the Black Report despite government attempts at a cover-up. This showed that there had been an improvement in health across all the classes during the first 35 years of the NHS but there was still a relationship between socio-economic class and infant mortality rates, life expectancy and in the use of medical services.

Massively underfunded, the NHS limped through the 1980s accumulating debts and longer and longer waiting lists. The Wanless report in 2001 concluded that between 1972 and 1998 Britain spent 267 billion less on health care than the European Union average. (See note 1)

More and more pressure from multinational companies was building on the NHS to open up to international markets, and the opportunity came when the Tory government under Margaret Thatcher revealed plans for an internal market in the NHS.


Competition, they claimed, was key to innovation. Hospitals were forced to set themselves up as NHS trusts in order to compete to provide care for the purchasers - health authorities and some GPs who were fundholders.

Far from leading to innovation, competition led to unnecessary duplication of services and the deepening of a two-tier system. Labour pledged to abolish it on coming to power! (See note 2,3)

Those who believed New Labour would be the saviour of the NHS must be shaking their heads in dismay. Whilst there has been a massive increase in funding of the NHS - now 104 billion a year - this has been offset by the effects of the sickening pace of 'reform' in the direction of greater privatisation of services and the introduction of not just an internal but an external market in the NHS.

Each new health minister (Frank Dobson, Alan Milburn, John Reid, Patricia Hewitt and now Alan Johnson) has brought with them new organisational changes causing turmoil. All the new money with comparatively little to show for it in terms of health outcomes, has sparked a huge debate about 'can we afford the NHS?' Is the problem simply that the new, often expensive, technology and burgeoning demand for health services can't be met by a centrally funded, publicly provided system?

Arguments about the need for the public to pay 'top-up fees' for certain services the NHS can't afford were backed by the British Medical Association's annual conference of consultants recently. 1 If this fissure is opened up, private insurance companies will do everything they can to jump in and make it a gaping chasm.

Already one company offered insurance to those who thought they may need Herceptin (a breast cancer treatment) in areas of the UK where it was not easily available on the NHS, until NICE (a health quango) recommended it be made more accessible to patients.

The prospect of a private insurance based health system for all health care is not immediately on the cards but those services deemed 'unaffordable' could be taken care of in this way, inevitably denying those unable to afford insurance premiums access to certain treatments.

Dental treatments, previously easily available on the NHS have now become practically impossible to obtain in some areas, without dental insurance plans.

A British Medical Journal article recently showed how this has resulted in a doubling of hospital admissions for drainage of dental abscesses. This is an example of how charging for selected services can end up costing more money in other parts of the NHS. In effect people who can't afford dental care, now have to wait until they end up with serious infections before they can get free NHS treatment.


Throughout its existence there have been accusations of wasteful practices in the NHS, yet insurance based systems around the world have proved less efficient with far greater administrative costs, and don't necessarily buy health benefits. (See note 1)

But the biggest waste in the NHS today has to be the money being siphoned off to private companies, who have taken over the running of parts of the service.

It began with privatisation of non-clinical services like laundry, catering, cleaning. This was followed by building and maintenance contracts given to companies in the form of PFI (Private Finance Initiative) deals.

More recently, clinical services are regularly provided by private companies for investigations, surgical procedures, screening and primary care services. Newly created Foundation Hospitals are, in effect, businesses where financial interests are primary. The long term care of vulnerable elderly people has been farmed off to private home care providers or private residential and nursing homes. (See note 2)

In particular, the creation of PFI hospitals has cost the NHS unnecessary money. The cost of building a PFI hospital is immediately much higher than the same building would have been if publicly financed, because borrowings costs for private firms are 1%-4% higher than public borrowing costs. This, in addition to other costs associated with private finance, means that instead of a 6% annual capital charge (as previously paid under treasury funded schemes), NHS trusts forked out two-to-three times this amount to pay for PFI hospitals in the first wave.

Bed numbers in this wave of PFI hospitals were reduced by an average of 30% to keep costs down. In some cases these hospitals were then unable to meet demand and more public money was diverted to pay private hospitals to mop up operations the NHS trust couldn't fit in.

Despite the discrediting of PFI the government have pushed ahead determinedly with more projects. It has become clear their motivation lies not in wanting to improve patient care but in keeping New Labour's big business friends happy, offering them long term guarantees of income with little or no risk attached. (See note 2)

In order to meet demand, independent sector treatment centres (ISTCs) have been funded by the NHS. These centres have been allowed to compete with NHS hospitals but have been given more favourable terms. Offered block contracts, they have been paid for operations they haven't done whilst NHS trusts get paid per operation. This is despite the fact that average operation costs in ISTCs have been 11% or more than the equivalent done on the NHS.

These examples of the way money is diverted away from front line services and staffing into the pockets of private companies' shareholders show how a reversal of these policies could immediately make huge sums of money available in the NHS. If we are to sustain a quality, publicly funded health service for all, we have to end privatisation and take into public ownership, the independent sector treatment centres and private hospitals, compensation being given only on the basis of proven need.

Although the centrally funded NHS, free at the point of delivery, still exists, it is under serious threat. Inequality in health care continues to this day. Research done by the Association of Public Health Observatories shows people in deprived areas do not eat well or exercise enough or go to the GP when they should. (See note 5)

Several studies have shown that 'deprived patients were less likely to be investigated and offered surgery once coronary heart disease had developed. In addition these patients may have been further disadvantaged by having to wait longer for surgery because of being given lower priority'.

Areas where life expectancy is lowest have the least GPs per head of population and as the number of GPs has increased over the past 20 years so has the inequality in their distribution. (See note 1)

But then the NHS has never managed to provide a truly equal service and will not be able to under capitalism which is inherently inequitable.

The existence and extension of market policies in the NHS has created more of a lopsided, two-tier system. Only the eradication of business involvement and competing interests will make a service based solely on health needs possible.

Democratic control

The question of who controls health care is crucial. Decisions about what services should and shouldn't be provided must not be made by those with financial incentives but by democratically elected representatives of the staff, patients and the working class as a whole, in order to reflect genuine needs.

Nationalisation of the pharmaceutical companies under workers' control and management would free up vast funds for NHS treatments, which these companies currently drain out of the system.

Making drugs generically, off patent, would reduce costs enormously and prevent the wasteful duplication that occurs when competing drug companies produce similar medications in an attempt to vie for markets. Nationalisation would also allow scientists the freedom to research rarer conditions which are so underfunded because they are deemed unprofitable at the moment.

Under socialism, not only would these things be possible but we could begin to tackle the causes of disease and improve housing, working conditions and see an end to poverty. Resources could be planned to meet needs instead of making profits.

Up and down the country demonstrations have been taking place fighting to save the NHS as it exists and to improve services. Building and bringing together these campaigns is vital. But also, if we really want to give decent health care to all and meet the challenges set out by Bevan in forming the NHS, we have to extend that fight to one for a complete change in the way society is run - the fight for a socialist world.

Socialist Party member Jackie Grunsell is a doctor practising in the NHS. She was elected to Kirklees council in May 2006, representing the Save Huddersfield NHS local community campaign.


1. Tony Delamothe: The NHS at 60, series of articles in BMJ May/June 2008

2. Allyson Pollock: NHS plc The Privatisation of Our Health Care, Verso 2004

3. Geoffrey Rivett: The Start of the NHS,

4. An introduction to social policy, Health care

5. Sarah Boseley, John Carvel: Local Inequalities mark map of wellbeing, Guardian 24/6/208

6. Niall Dickinson: The NHS: from cradle to grave?, 19/3/2004

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In The Socialist 2 July 2008:

Hands off our NHS!

Feature: 60 years of the NHS

Socialist Party campaigns

Local government strike action: Workers say: 'enough is enough!'

Fight Labour's welfare privatisation

91% of pay deals are below inflation

Workers united against pay freeze

Socialist Party news and analysis

Education - class segregation grows

Boris Johnson reveals his real policies

Royals down to their last crown?

Union support for demo to stop BNP 'festival'

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Campaign for a New Workers Party

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Obituary: Terry Fields

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PCS shows action gets results

Visteon workers win 5%

For a fighting, democratic Usdaw

Tube cleaners in pay strike

Victory for Belfast Airport shop stewards

East London street cleaners fight privatised employer


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